FP2P Watch

In many ways, China is the most capitalist country in the world right now. In the big Chinese cities, living standards and per capita income are at the level of countries the World Bank would deem "high middle income," already higher, for example, than that of the Czech Republic.

Pointer from Tyler Cowen. To call Fogel a China optimist is an understatement. The article is a must-read. We interviewed Fogel in From Poverty to Prosperity. We also interviewed others who were not nearly as optimistic about China.

[UPDATE: Specifically, Amar Bhide and Edmund Phelps question whether China has the sort of "venturesome consumers" who can support innovation. While Fogel in his essay emphasizes the impact of Chinese education, William Lewis argues that education is not such a large factor in international productivity differences. So these are not settled issues, by any means.]

Ryan Streeter points out that Chile has become the first South American Country to join the OECD. This is vindication for free-market economists, starting with Milton Friedman. It indicates the importance of what we refer to in FP2P as the "operating system" for the economy.

Incidentally, I am told that the publisher is printing more copies of FP2P, because some outlets have run short. That sound promising.

Comments and Sharing

Questions: Does Fogel speak Chinese? How many personal friends or relatives does he have who are Chinese? How much time has he spent in the Chinese countryside? Because I generally don't trust portraits of countries by people who don't have these abilities and experiences.

The problem I have with economics: just so stories. Confusion of correlation and causality.

Not saying the Chile example isn't based on the Chicago folks, but so much of what passes for analysis or description in economics seems more a form of rationalization for one's particular pet project and ideology.

Right now Japan has about the same per capita GDP as Europe. The US is about 25% higher. The article present absolutely no reason why China would get twice as rich as Europe and Japan. It could happen, but why would we expect it? Talking about high current growth rates and rising levels of college education mean nothing. Those were true of South Korea 20 years ago, and they haven't suddenly become richer than Europe.

I am a China optimist, but feel like a pessimist in comparison to Fogel. I thought his comments about the pragmatism of the policymakers was perceptive, but don't forget about all the corruption and rent-seeking.

Oh, and the most successful growth stories in recent decades have been countries with small populations, suggesting there are increasing diseconomies of scale in governance.

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